Fourth International, March-April 1950

George Clarke

The Maturing Crisis

Since the end of the last war, and particularly since the proclamation of the Truman Doctrine, the world politics of American Imperialism has dominated domestic politics and the domestic scene in this country. The drive for world supremacy – with its corollary, the cold war with the Soviet Union – has profoundly influenced the march of events at home. It has in part shaped the direction of economic trends. It has created strong pressures toward the police state. It speeded the bureaucratization of the CIO. It has had a strong effect on the consciousness of the American workers and on their activities, or lack of activity, in the class struggle.

One year ago, approximately, American Imperialism appeared to be in full flush of victory on the world arena. Its plan to erect a West European bastion against the Soviet Union, with the bricks of Marshall Plan aid, was going full speed ahead. From the Marshall Plan there followed inevitably, and with increasing success, the forging of the

North Atlantic military alliance. America could already report certain successes in the first conflicts in the cold war. The airlift was defeating Stalin’s Berlin Blockade. With the removal of the Stalinist ministers, stable capitalist governments were being created in France and Italy. And, thanks to the treachery of the Kremlin and its counterrevolutionary policies, America was winning the “battle of Greece.” Above all, what gave confidence to the American bourgeoisie was its seeming monopoly of the atom bomb. That monopoly appeared to solve the deep and intricate questions posed by a projected Third World War.

Crisis of US World Policy

Now, one year later, that picture has been sharply altered. All the elements of political crisis, at least as far as America’s foreign policy is concerned, have appeared.

1. The anarchy and dislocation of European economy: Two years before the completion of the Marshall Plan, which superficially has gained its economic objectives, European capitalism is showing all the symptoms and contradictions that foretell the coming of crisis. Production in Western Europe has been restored to pre-war levels, but their markets for a large volume of goods have shrunk internally as well as on a world scale. At the same time, Western Europe and England have begun to resist the unrelenting pressure of the North American colossus and to clamor for larger rations of world trade and overseas markets. The struggle with Great Britain has become particularly sharp, taking the form of a bitter trade and currency war over the entire world. England heads the opposition to America’s plans for “unification” and “integration” of Western Europe (i.e., its transformation into a semi-colonial region of the United States), without which the Marshall Plan can be nothing but a gigantic relief scheme. Simultaneous with these first cracks in the Marshall Plan structure, there has appeared the baffling problem of Germany, a problem as insoluble for American imperialism as that of the rest of Europe. Germany is the focus of all the contradictions preventing America from creating any kind of stability in the Old World. Washington is faced with two alternatives, both of them bad: Either to revive Germany to its past power, both economically and politically, to rebuild the technological giant which will quickly devour all its competitors on the continent, and thereby destroy everything the Marshall Plan billions have achieved to date in the revival of Western Europe. Or, in seeking a compromise to fit Germany into its present patterns, American Imperialism must permit the German industrialists to turn toward Eastern Europe for markets, thus strengthening the opposing side in the cold war. In either case the perspective is a dismal one and does not allow any rational course on the part of American Imperialism.

So, as has been clearly noted even by the heads of ECA, despite all the billions poured out by the Marshall Plan Western Europe rushes towards the inevitable crisis.

2. The developments in Asia, particularly in China. The defeat of Chiang Kai-shek, unexpected on so wide and sweeping a scale, has had a jolting impact upon the American bourgeoisie. True, they were resigned after Marshall’s return from China in 1947 to the loss of China, but they did not believe it would be lost so quickly, or that the victories of the Stalinist peasant army would be so thorough. Now they shudder in icy fear that this revolutionary development, however the’ Stalinists in China have distorted it, may spread to the rest of Asia. The greatest of potential markets, which American Imperialism has been eyeing so greedily all these years, may be irrevocably lost. The best it can now hope for is some form of trade agreement with the Chinese Stalinists. But, it is quite obvious that Wall Street will not be able to dictate its own terms, at least not for some time to come, as it did in the past. And no sooner had Mao’s armies conquered China than the first big breach appeared in the imperialist front. Differences of interests between America and England came to the surface which resulted in England’s recognition of the Mao government and set new tendencies in motion on the world diplomatic arena to the disadvantage of the US State Department.

The third outstanding development was the atomic explosion in Russia. Above all, this explosion has blown up the theory of a quick American victory in a war. It has undermined that miraculous military superiority derived from the atom bomb monopoly, although America’s real military predominance, based on its unrivalled productive plant, remains. By the same token, the atomic explosion in Russia, has weakened America’s position toward its allies in Western Europe who, now facing danger from two sides, are far more critical of their Yankee protector. Finally, the effect of this explosion in Russia upon the American people cannot be exaggerated. If any single event proves decisive in starting a trend toward new political thought in this country, it will be the advent of the atom that confronts the people with the spectre of total disaster. The nightmare becomes still more gruesome as spy-scare headlines announce that Russia either possesses the H-bomb secret, or will soon have it. Perhaps it will yet be said that the splitting of the atom undermined capitalism just as Marx once said that the invention of gunpowder was a powerful factor in undermining feudalism.

Clamor for a Deal with Stalin

These developments on the world arena have created a strong division in the top circles of the American bourgeoisie, not yet entirely apparent, but clearly moving toward a crisis of morale. The Republicans have even announced in their election platform that, for the first time? since 1940, foreign policy will be at issue in the elections. Bi-partisan policy, although followed in actuality, will cease to have the same moral effect it has had since the beginning of the last war. This was plain in the first discussions over China that blew up on the question of Formosa. Bourgeois liberals, like the New Republic editors, have proclaimed the death of the Truman Doctrine and are urging the elaboration of some new foreign policy.

In 1948 Henry Wallace was the sole voice among the American bourgeoisie in favor of a settlement of the cold war with Russia. Today, in various forms, this cry for a deal is being taken up by a substantial section of American bourgeois public opinion. Senator McMahon’s speech in the Senate, although still upholding administration policy, nonetheless contains a strong element of this demand for a deal. The same outcry comes from the Association of American Scientists.

This clamor, which is only beginning, has already compelled Acheson to defend, explain and rationalize the policy which only a year ago was considered the last word in wisdom. He says in effect that a deal now exists. But it is not formalized, it is established by force: America dominates Greece – that constitutes a settlement with the Soviet Union in the Mediterranean. The defeat of the Berlin Blockade – that constitutes partial terms with the Kremlin on Germany. American puppets win elections and dominate governments in various European countries, and that constitutes a type of agreement. Thus, according to Acheson, a de facto deal with the Kremlin in the form of an armed truce has been in existence for a number of years and will probably continue on this basis. But this is hardly the last word to be said about the evolution of American foreign policy, and it is doubtful that Acheson will be the one to say it.

Yet, precisely because of the uncertainty of the outcome of a projected anti-Soviet war, as a consequence of the invention of terribly destructive weapons, its unleashing more and more takes the form of an act of desperation and therefore tends to postpone it. And because it would be an act of desperation, it becomes difficult to determine the time of the actual outbreak of war. The monopolists will hesitate many times before taking the fatal plunge, until they reach the blind alley in world and domestic politics, the crisis from which there is no escape but war.

On the other hand this fumbling, this division, this lack of confidence and sure perspective in its world policy on the part of the American bourgeoisie is lowering its prestige not only abroad but also at home; and this uncertainty must find a reflection in the domestic situation, in American politics and in the class struggle. The doubts and weakness of the ruling class will tend to stimulate greater confidence among the masses in dealing with their main enemy who no longer appears as powerful, arrogant, as self-assured as it did in the past. Eventually, this loss of prestige will lead to splits within the labor agencies of American imperialism, i.e., among the trade union bureaucracy, and to the growth of opposition movements on a larger scale than ever before.

Symptoms of Economic Crisis at Home

If the conditions of a crisis of American world policy are maturing, so too are the conditions for a domestic crisis. Its advent, which even bourgeois analysts have been predicting for many years, will radically alter the political scene and the relationship of forces in this country. This prognosis, made by the National Committee of the SWP in its plenary session one year ago, remains as correct today.

When will this crisis occur? Without making any pinpoint predictions, it is interesting to note that at the first of this year the bourgeoisie and all its leading spokesmen and economists had no more than a six-months perspective for the boom. That was all they were willing to gamble upon. While this prognosis cannot be read like a timetable, it serves as an index of the instability of the present economic situation and is verified by the appearance of the following symptoms of crisis.

First: the recovery from the 1949 recession can be explained to a large extent by the increase in government expenditures. Whereas the gross private domestic investment dropped from $45 billion in 1948 to $36.8 billion in 1949, government expenditures in the same period rose from $36.7 billion to $43.5 billion. Thus the decline in business activity was made up for almost to the penny by huge government spending. This appears in the large budget deficit of some $5 billion which continues in the very midst of so-called prosperity conditions.

Second, the steady decline of foreign trade. In 1948, there was a favorable margin of almost $2 billion in foreign trade after deducting Marshall Plan aid and private loans from the surplus of exports over imports. By 1949 that margin disappeared and it is anticipated that in 1950 there will be a deficit of some $0.6 billion. This is the consequence of growing competition and world productivity, a new factor since the end of the war.

A few aspects of this new world competition will suffice to indicate the trend. Despite apparent agreement there has been a British ban on oil imports from dollar areas into Great Britain and some other members of the sterling bloc. There has been a growth of refinery capacity on the European continent, which has caused cut-backs in American oil production in Saudi Arabia and Venezuela. The unfavorable price position of US steel products and the increasing capacity of the European steel industry, which now has a surplus of some 8 million tons, has lowered the demand for American steel in world markets. Auto exports have declined some 15% in 1949 compared to 1948. Coal exports have dropped by one-third, one of the factors behind the bitter struggles in the mine areas. The export of manufactured foodstuffs has dropped some 30%.

Third, and one of the most significant symptoms of crisis, is the decline in expenditure for plant and equipment. Taking 1948 as the index of 100, investments in this sphere dropped to 93 in 1949 and by 1950, as has been indicated by many reliable sources, the index point will drop to 80. In other words, new investment in American industry is tending to fall quite rapidly, resulting in an accumulation of idle capital which can no longer be profitably invested at home.

Shrinking of Domestic Market

Meanwhile the domestic market itself has begun to shrink. Besides such a major and long-range factor as the great growth of productivity without a corresponding increase in the workers share in the national income, more immediate and direct signs of this contraction are already visible.

We note first a sharp decline in farm income, which in 1947 was some $18 billion. By 1948 it dropped to $16.7 billion, in 1949 to $14 billion and it is estimated will drop to $12 billion in 1950.

A parallel development has been the great increase in consumer credit. In other words, consumer income is no longer being stored in savings as a cushion against future shocks but on the contrary is being mortgaged on a wholesale scale; it is as if, to change the metaphor, a time-bomb were being planted under the whole economy. A statistical contrast will show the gravity of this development. In 1949, consumer credit equalled 8.4 percent of the national income. But in 1929, the year immediately preceding the last depression, consumer credit was only slightly larger or 8.7 percent of the national income.

Two months ago, The Militant calculated that unemployment had mounted to some 5 million, or one and one-half million more than admitted at the time in doctored government statistics. Today, the government admits the existence of an unemployed army of almost 5 million which means the figure is now closer to 6 or 6.5 million. This is a larger percentage of the labor force (although the labor force is larger today) than in 1929, the last pre-crisis year of the pre-war depression.

The Basis of the Truman Coalition

These are all elements of crisis, symptoms of a strong trend and indicative of the direction of this trend, but by themselves they have not yet been strong enough to alter the present relative economic stability. The Truman coalition with the labor bureaucracy has rested primarily upon these boom conditions. The coalition has not been subject 1o the strains and pressures it would have experienced had crisis conditions been more advanced than they are today. There has been no frontal offensive by the corporations against the labor movement on the economic field.

Heavy profit-taking has continued from year to year, almost since the end of the war. Wage increases have not only been offset by rising prices but by the increased productivity of labor, in the forms of a speed-up and the worsening of working conditions – one of the generous gifts granted to the corporations by the trade union bureaucracy. To this must be added the failure of the trade union movement to struggle for substantial wage concessions. Under such conditions, the corporations were not constrained to carry on a frontal attack on the trade unions and the living standards of the American working class. And, in the absence of such an offensive, the Truman coalition with the labor bureaucracy has been able to survive and even to have smooth sailing in the past 16 months since the presidential elections.

Now, of course, it will not take the outbreak of a crisis to alter this situation. Increasing competition among the corporations, loss of foreign trade and the reduction of profits at home – all these factors are bound to create a change in the attitude of the bourgeoisie even before an economic tailspin occurs. The pronouncement of the Steel Fact Finding Board a year ago that wage increases were already impermissible, heralded an expected sharpening of competition, a decline in profits and a determination on the part of the corporations not to grant further wage increases. An anticipation of such conflicts is already apparent in the “soft” sectors of industry, like coal, which have been placed on the “sick” list. Here we encounter a fierce resistance to concessions, joined in by the entire capitalist class and by the administration, sorely trying the “coalition” and producing the first resurgence of labor militancy even under “boom” conditions.

Nevertheless, the first effects of the slow growth of unemployment, which set in with the slight “recession” oi 1949, have been to create fear rather than militancy among the American workers. It is by virtue of such conditions that Truman has been able to continue his program of social demagogy without substantial social reforms. This is one of the most striking phenomena of the last period. We have never known in this country a president as radical in his promises of social reform with such a meager, slight and almost non-existent record in the legislation of actual reforms. Yet, as is well known, he has not been able to rely upon demagogy and promises alone. This is clearly seen in the paradox, that this most “laborite” of all Federal administrations has also been the most repressive and most reactionary in its trend toward a police state. Complemented by the bureaucratization in the unions, this growth of repressions is the best index of how shaky is the present conjuncture and how precarious the base of Truman’s “laborism.”

Radical Parties Put to the Test

In the meanwhile, however, the combination of “labor-ism” and repression has had a debilitating effect upon American radicalism. In reading the excellent book by Ray Ginger on Euge’ne V. Debs, one is struck by the great dissimilarity of the times prior to World War I and our own. The rampant reaction and anti-labor repressions of Debs’ day were not accompanied by social reforms. The robber barons fought tooth-and-nail against the organization of unions and against granting any real improvement of the workers’ living standards. In this, the government was a most faithful tool. As a consequence, with all other roads blocked, the workers in large numbers turned toward the Socialist Party, towards socialism in the vague form they understood it.

If we extend the contrast, it will be observed that the situation today is also greatly different from that prevailing during the Roosevelt New Deal era. That too was a period of social reforms but one without the sweeping repressions of today. While the broad masses, contrary to their sentiments before the First World War, were not receptive to radicalism, nevertheless, the radicals had an arena in the struggles which unfolded and could attract the advanced elements of an awakening working class to the revolutionary movement.

The present situation is very much unlike these other two. Broad masses are under the spell of the Truman-Welfare State illusion. Social reforms’ remain mostly a promise but the workers permit themselves, at least for a “time because of conditions of employment, to be put off with this promise. On the other hand, the advanced elements, although more cognizant of Truman’s demagogy, tend to be frightened by the repression, it is not a question of this or that particular worker but of a broad layer of the more militant and conscious workers whom the radicals could influence in previous periods.

The Stalinists have suffered disastrously in this past period not so much from blows but from an utter inability to create any genuine support for a struggle against the repressions that have fallen upon them, so discredited had they already become.

The Wallace movement, which suddenly appeared as the great new dispensation in 1948, was completely outflanked by Truman’s demagogy and its decline has been just as sudden, if more catastrophic. It is doubtful whether there has been any similar experience of a movement that has catapulted downward so quickly. True, the Progressive Party still has some mass support as was indicated in the 1948 New York City elections, but it has lost all the original momentum it possessed in the Spring and early Summer of 1948.

The Socialist Party is going through the throes of its final disintegration. It has announced its desire to liquidate itself into the Social Democratic Federation. But this is not quite accurate in describing the real process which has already gone beyond that stage. In many places in the country, the SP for all practical purposes is dissolved into the Democratic party, or more precisely into its trade union adjuncts, PAC and LPEL, and into the Americans for Democratic Action. What merges with the Social Democratic Federation will therefore be only the rag ends of a movement that has already made its merger with a section of the petty bourgeoisie even further to the right.

The Shachtmanites, yielding to the pressure of an adverse period, have abandoned their perspective of an independent revolutionary party. Their pessimism has deepened and blackened with the collapse of their hopes in Europe. Having decided that America was no longer a suitable spot upon which to build a perspective, they conjured up a great dream about the mish-mash centrist RDR in France. But the RDR disappeared without a trace almost before Shachtman could hold his first meeting and celebrate his great victory in another continent. Internally, their ranks go through a steady decomposition, politically and organizationally.

Against this adverse background the achievement of American Trotskyism in the past period has been remarkable. Despite defeats in the unions, despite persecution, and above all despite isolation, the revolutionary vanguard organized in the Socialist Workers Party has suffered incidental losses at its perimeter but not in its main structure. The cadre – -and that is what counts – has remained politically firm, yielding neither to Trumanisin nor Stalinism.

The Trotskyists were able to weather the storm first of all because of their profound and unalterable convictions, upon which the great perspective for the victory of the proletariat on a world scale and in the United States is based. This will be enriched by an understanding of the maturing contradictions of US imperialism which are preparing the ground for the greatest social crisis America has ever seen.

Effects of Welfare State Demagogy

We have already referred to the beginning of the crisis of the world policy of American imperialism and to the maturing conditions for a domestic economic crisis. Now let us add that the social demagogy of the Truman ad-ministration which at the present time has a restraining effect on the masses, will become a stimulus for mass rad-icalization in the next period. Throughout the last few years there has been a continuing public debate in the press and on the radio, in the speeches of the politicians and in the platforms of the parties on the question of Communism versus capitalism, on the advantages of one against the other. There has been a public debate on the question of the Welfare State and on Socialism, and the Republicans promise to make them main issues in the 1950 elections.

We must not overlook the profound effect this is having on the consciousness of the American workers. As crisis conditions mature, this one-sided propaganda of the bourgeoisie will lead to a political polarization along class lines and to the growth of radicalization on a hitherto unknown scale.

It will certainly incline the broadest masses toward readier acceptance of the Trotskyist transitional program. For in effect, if the Welfare State idea were to be drawn out to its logical conclusions, there could be read into it all of these transitional demands. True, neither Truman nor the Democratic Party nor the labor bureaucracy have any intention or desire to infuse their empty demagogic rhetoric with any logic or reality, but that will not prevent the masses from thinking these problems out to their most radical end. And if in its broad mass, the workers are being inclined toward more radical politics, the more advanced elements are being conditioned today to accept the revolutionary program.

Within the coalition in the Democratic Party certain molecular processes are also at work. It is not the same kind of coalition that existed in Roosevelt’s day. The base of the bourgeoisie and its political machinery has been constantly narrowing; the reliance of the Federal administration upon the labor movement correspondingly grown. In state after state, the old-line political machines have either been destroyed or are in great difficulties. The trade union bureaucracy, acting as a united AFL-CIO political unit, wields far more machine control within the Democratic Party than it has in the past.

But precisely this increasing preponderance of the labor bureaucracy, and behind them of the trade unions, in the Democratic Party must prepare the conditions for the irreparable shattering of this party. When the Democratic Party splinters under the blows of the crisis – and it is inconceivable that it can be transformed into a labor party in this country – it will emerge in unrecognizable form, in numerous fragments. This would completely disrupt American politics in its traditional two-party form.

Repressions and Labor Struggles

As the struggle of larger masses unfolds, the repressions carried out by the government will be directed against broader groups of American workers. This will sharpen the class conflicts and the strikes, giving them an ever deeper political character. The trade union bureaucracy, bound hand and foot to the governmental administration and to the State Department, is constantly compromising itself in the eyes of the masses and thus assuring, as the conditions for struggle develop, that it will not be the last target of mass discontent.

There are already indications of this. The speed-up in the Ford empire produced a struggle that was directed not only against Ford, but against Reuther. The growing unemployment in maritime, far more extensive than in any single industry in the country, erupted in a fight in New York aimed first of all, against the Curran administration in the National Maritime Union. The miners’ strike and victory is at least as compromising in its exposure of Murray and Reuther as it is of the Truman Administration. And its full repercussions have still to be felt. These are heat-lightning flashes of struggles that will develop on many planes and in many industries in the next period.

Finally, and not least important, is the world crisis of Stalinism. The world-shaking importance of Tito’s break with Stalin cannot be overestimated. This break is only beginning to reverberate within the world and American Stalinist movement. This development gains in significance from the fact that the crisis of world Stalinism parallels the maturing debacle looming before world capitalism.

The period of reaction has not yet run its course. But the signs of a great and stirring change are clearly on the horizon. Trotskyism, as its great leader predicted, will yet speak with the voice of millions.